Correlation Between Fidelity 500 and Blackrock Energy

Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Blackrock Energy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity 500 and Blackrock Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity 500 Index and Blackrock Energy And, you can compare the effects of market volatilities on Fidelity 500 and Blackrock Energy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity 500 with a short position of Blackrock Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Blackrock Energy.

Diversification Opportunities for Fidelity 500 and Blackrock Energy

0.49

Correlation Coefficient

Fidelity 500  Blackrock Energy

Very weak diversification

The 3 months correlation between Fidelity and Blackrock is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Blackrock Energy And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Energy And and Fidelity 500 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity 500 Index are associated (or correlated) with Blackrock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Energy And has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Blackrock Energy go up and down completely randomly.

Pair Corralation between Fidelity 500 and Blackrock Energy

Assuming the 90 days horizon Fidelity 500 Index is expected to under-perform the Blackrock Energy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity 500 Index is 1.03 times less risky than Blackrock Energy. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Blackrock Energy And is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,431  in Blackrock Energy And on December 11, 2024 and sell it today you would lose (65.00) from holding Blackrock Energy And or give up 4.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity 500 Index  vs.  Blackrock Energy And

Fidelity 500 Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity 500 Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Blackrock Energy And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Energy And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity 500 and Blackrock Energy

The main advantage of trading using opposite Fidelity 500 and Blackrock Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Blackrock Energy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Blackrock Energy will offset losses from the drop in Blackrock Energy's long position.

The idea behind Fidelity 500 Index and Blackrock Energy And pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.